Things to consider for applying to an IVA

Things to consider for applying to an IVA

IVA register: Suppose you think that an Individual Voluntary Arrangement (IVA) is the right insolvency debt measure for you. In that case, you should apply for one by finding the most reliable and authorized debt management company or debt charity like the Step Change debt charity.

Before you apply for an IVA, there are a few factors that you should consider. For instance, if you are eligible for an IVA, what are the advantages and disadvantages you may face by applying for an IVA, what debts you can get rid of with an IVA, etc. With that in mind, here we will discuss how you can qualify to apply for an IVA and other related aspects.

If you have high debts, entering into an IVA will help you write off all or part of your debts within a set duration. An IVA legally binds you (the debtor) and the creditors in an agreement to pay off the debts. The IVA agreement is such that the monthly repayment value is affordable for you, and you can sufficiently pay off the debts. If there is any default on your side, the IVA will be considered a failure. Nonetheless, when the IVA ends, the creditors will write off your outstanding debts, if any.

Consider getting a certified Insolvency Practitioner (IP)

You are not eligible to do an IVA by yourself. Only authorized and licensed personnel can apply for your IVA. Since an IVA is a legal debt solution, you need an IP to arrange an IVA for you. Most qualified IPs are regulated under the Insolvency Practitioners Association in the UK. The IP in an IVA will act on your behalf and represent you before the creditors and the court when a situation arises.

The Insolvency Practitioner is responsible for setting up your IVA and getting approval from the creditors and the court altogether. They will assess your financial affairs and debts and analyze how much of your debts you can pay off. Considering your economic assessment, the IP will draft a debt repayment plan that is affordable to you and satisfactory to the creditors. If the IVA proposal does not work out for the creditors, your IVA will fail. If your IVA debt repayment plan works, the IP is responsible for monitoring the regular IVA payments and holding annual IVA reviews to identify any improvement in your financial situation. If it is, the IP will draft a new debt repayment plan to make you pay off your debts in a shorter duration, i.e., before four or five years. These are the reasons why you should consider getting an IP for applying for an IVA with StepChange debt charity. iva register

After assessing your situation, if the IP believes that an IVA is not the right choice for you, they will suggest another alternative to writing off your debts realistically.

Consider your eligibility to apply for an IVA.

Just because you have multiple debts does not qualify you to apply for an IVA. Since an IVA has some severe implications for your life after entering into an IVA, you need to check your eligibility for applying for an IVA with StepChange debt charity.

  • Where do you live?

Suppose you are thinking of applying for an IVA. In that case, you must consider that an IVA, as a debt solution offered by the StepChange debt charity, is only available for residents of Northern Ireland, Wales, and England. So, if you live in Scotland, you cannot apply for an IVA but instead can use it for its alternative, the Protected Trust Deed.

  • Do you have a regular income source?

An IVA requires you to make monthly IVA contributions to cover the debts. You can only afford to make those payments if you have a regular and reliable income source. Your sustainable income sources could include salary, benefits, pension, third-party contributions, inheritance, etc.

  • Does your total debt value exceed £5,000?

To apply for an IVA with StepChange debt charity, your debt value must not be less than £5,000. If the combined value of your unsecured debts falls less than the stated amount, the IP will suggest a different debt measure. Although there is no prescribed minimum debt limit, passing the stated amount can improve the chances of successful IVA.

  • Do you have more than one creditor to whom you owe money?

Applying for an IVA when you have only one creditor is not worth the effort and expense. Thus, you should consider applying for an IVA with StepChange debt charity only if you have multiple creditors whose total debts exceed £5,000.

  • Are you insolvent?

The possibility of having a successful IVA is viable only if you are insolvent. It would help if you considered applying for an IVA when your income and assets fall short of covering the debts within a specified duration. If you are solvent, the creditors will likely reject your IVA proposal as you have enough funds to repay the debts without entering into an IVA agreement.

Consider your debts that an IVA might cover or not.

Since you want to apply for an IVA, you know that an IVA can help you get rid of all your debts. However, there are a few debt exceptions in an IVA.

For a fact, an IVA covers most of your unsecured debts, including personal loans, credit card debts, payday loans, bank overdrafts, water arrears, gas & electricity bills arrears, store cards, council tax arrears, catalogs, advance tax credit, insurance arrears, etc.

Another thing you should mind is that an IVA does not cover your priority debts. So, you should not include these debts when applying for an IVA. Debts that an IVA excludes are the court fines, maintenance arrears, mortgages, Hire Purchase agreements, child support arrears, student loans, etc. iva register

Regardless, your Insolvency Practitioner will tell you all about the debts list of an IVA.

Consider alternative debt solutions if an IVA does not work out for you.

An Individual Voluntary Arrangement (IVA) is a debt measure you should apply for if you do not want bankruptcy due to your inability to clear off your debts on time. Assuming that you apply for an IVA but get rejected, other debt alternatives are there to become debt-free with StepChange debt charity. Depending on your situation and capacity to repay debts, you can get free debt advice from StepChange debt charity and go for other probable debt solutions like Debt Management Plan (DMP), Debt Relief Order (DRO), Bankruptcy, to name a few.

Conclusion

The things for consideration when applying for an IVA with StepChange debt charity as listed here are not exclusive. While an IVA can affect your credit score and other financial opportunities, many factors impact an IVA from getting approved.

If you are considering a StepChange debt charity IVA, you can dial  StepChange Uk contact number for free debt advice.

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